Military Reserve sanctuary, retirement, and time in grade

My spouse was selected for promotion before reaching sanctuary. He was promoted after sanctuary orders were issued, but prior to deployment. We were completely unaware of the “promotion during active duty in sanctuary” rule that would cancel his retirement orders and allow him to stay on active duty for his promotion time in grade. The military has NOT canceled his retirement orders and in fact, told him last week he had to submit a time in grade waiver request. He was told sanctuary orders could not be extended, however, he didn’t tell them he was recently promoted– would that make a difference? No one at the G1 Pentagon has notified him, nor were his promotion orders modified to cancel his retirement.

His date of initial entry on military service is May 1987, his sanctuary orders were issued September 2012, he was promoted to O-6 on 1 December 2012, and the sanctuary orders end in May 2014. Can you please clarify or point me to the regulation regarding the “promotion during active duty in sanctuary” rule? Thank you for your help.

P.S. The information on calculating his pay was very helpful and good news, because we thought the annuity calculation would be based on 20 years of service, and not consider his longevity which will be close to 26 years. So that was very good news if I am reading that correctly!!

It’s hard to believe that I’ve had half a dozen queries on sanctuary. However the last decade has put a lot of Reserve & National Guard members on active duty, and more of them are encountering sanctuary. From my limited experience the Navy and Air Force not big fans of the practice, but the Army and the Marines have used it when someone has the special skills for a certain billet. However today’s question is a slightly different situation where a servicemember was selected for promotion before they reached sanctuary, and then promoted after the sanctuary orders were released.

In the military, the term “sanctuary” refers to a Reserve/Guard member reaching a total of 18 years of active duty. If that happens while they’re on active-duty orders then they’re entitled to stay on active duty until they reach eligibility for an active-duty retirement. The program is part of federal law, and the reference is found in DoD Instruction 1235.12 on “Accessing the Reserve Components”. The Enclosure (3) guidelines (on page 15 of that PDF) include this paragraph:

“(5) Active Duty Protection. In accordance with section 12686 of Title 10 USC, Reserve Component members ordered to active duty who, on the date they would otherwise be released from active duty, are within two years of becoming eligible for retired pay or retainer pay under a purely military retirement system other than retired pay for non-regular service under chapter 1223 of Title 10 USC:

(a) Shall not be involuntarily released from active duty before they become eligible for that pay.

(b) Shall be absorbed in Service-authorized active end strengths, unless the release is approved by the Secretary of the Military Department concerned.”

Sanctuary is expensive. Each service is allowed to decide who they need to have on active duty for those two years, but they have to pay for it. When their servicemember in sanctuary becomes eligible for an active-duty pension (instead of a Reserve/Guard pension) then the service has to pay for the difference. The servicemember is also not normally allowed to continue on active duty past the 20-year retirement eligibility unless they’re integrated with the active-duty service.

I’ve heard of several servicemembers reaching sanctuary, but I’ve only heard of one who continued past 20 years of service. In that situation, while he was on his sanctuary orders, he was selected for promotion. When the selection list was approved (and he was on the promotion schedule) he applied for integration with his active-duty service. He stayed on active duty long enough to serve the minimum time-in-grade of his higher rank, and then he retired on an active-duty pension.

This reader’s spouse has a slightly different situation. He’d already been selected for promotion before he reached sanctuary, and then he promoted shortly after his sanctuary orders were issued.

“Sanctuary orders are not authorized to be amended to reflect a period beyond the end of the month in which the Soldier attains 20 years of active service. In cases of approved Active Duty for Operational Support service beyond 20 years of active service, the Soldier will be placed on a new set of orders and the sanctuary provisions of 10 USC 12686 will no longer apply.”

How does that happen? A few paragraphs later the memo says:

“Officers in sanctuary status may apply for Regular Army integration through the Call to Active Duty Program, and enlisted Soldiers in sanctuary status may apply for Regular Army enlistment through the Reserve Component to Active Component Program. Officers in sanctuary status should be advised that the CAD Program is a competitive accession program based upon the needs of the Army; there is no guarantee of approval. […] If approved and accessed into the Regular Army, the Soldier is subject to world-wide assignment based on the needs of the Army.”

Those are the rules, but sanctuary is still an unusual program and most personnel staffs aren’t familiar with it. Each service’s headquarters personnel staff has a sanctuary program manager, usually a senior civil servant who’s had years to become familiar with the details. In this case the servicemember needs to have a long talk with the program manager to make sure each understands how the servicemember got to sanctuary and when they were selected for promotion. They need to do that even though they’re on deployment, or else they’re going to waste a lot of time hearing different interpretations from lower levels of the chain of command. The program manager is going to be required to investigate this integration request anyway, so they might as well discuss the situation with the servicemember before the official application reaches their desk.

This servicemember is going to reach 20 years of service after only 18 months in the O-6 paygrade. Title 10 U.S. Code Section 1370 requires higher-ranking officers to serve three years in that grade in order to retire at that grade, but each service has the waiver authority to reduce that time to two years. Anything less than two years’ time in grade requires approval by SECDEF and Congress, which essentially means “Don’t even ask about it.” (SECDEF does not want to explain to inquisitive Congressional committees why some officers don’t have to serve their minimum two years’ TIG.) The only way for this sanctuary servicemember to reach TIG in their higher rank is to apply for integration into the Regular Army. After that approval they could hope for a new set of orders to remain in their current assignment for at least another six months (while applying for a TIG waiver down to two years when they retire) or they could receive a new set of orders to another duty station.

Will this servicemember be allowed to integrate into the Regular Army and gain at least six more months of active duty to retire at their higher grade? That’s hard to predict. A few years ago they might have been eagerly integrated and issued new orders, especially for a deployment. Now that the drawdown has started the Army could be reluctant to integrate anyone else into the Regular Army (let alone give them more time on active duty) if they originally reached retirement orders on sanctuary. The timing is very awkward for the service, too, because it would require staying on active duty past the end of a fiscal year. An additional six months of active duty would require that officer to count against end-of-year personnel strength. It’s going to be tough enough to comply with the drawdown requirements, and personnel staff will be reluctant to issue new orders to anyone without a mission-critical reason. A general officer could intervene with Army G-1 to plead this case, but general officers in a drawdown are only issued a few silver bullets.

The “worst case” is that the servicemember will reach 20 years of active-duty service in May 2014 and be required to retire on 1 June 2014 as an O-5 instead of as an O-6. Their DD-214 and their retiree ID would reflect an O-5 rank. Is there any other adverse impact?

The O-5 retirement might have had a financial impact if they were under the Reserve retirement or Final Pay systems. However they’re retiring from active duty on the High Three system, and their retired rank doesn’t matter for the pension calculation. The only thing that counts is years of service and the average of the highest 36 months of pay.

Here’s the numbers: those 36 months of High Three pay run from 1 June 2011 to 1 May 2014. (He retires on 1 June 2014 so there’s no active-duty paycheck that month.) It’s 18 months of O-5 pay (June 2011-Nov 2012) and 18 months of O-6 pay (Dec 2012-May 2014).

Since his DIEMS is May 1987 and he’s had a “good year” every year in the Reserves, he went over 24 years of service in June 2011 (the start of this 36-month period) and over 26 years of service in June 2013. The 18 months of O-5 pay is at the O-5>24 columns of the pay tables. The 18 months of O-6 pay is at the O-6>24 and O-6>26 columns.

$9,388.52 (again, assuming a 1% pay raise in 2014, but that’s not final).

The active-duty pension’s service multiplier is 2.5% x 20 years of service = 50%. The servicemember’s 26 “good years” count for pay purposes (the “over 26″ column in the pay table) but he has only 20 years of qualifying service (active duty service + Reserve points) for the active-duty service multiplier. That’s why the sanctuary orders cut off on 1 June 2014: at that point he’ll have the 20 years minimum for an active-duty pension.

$9,388.52 x 50% = $4,694.26. However the pension rules round that number down to a monthly pension deposit of ~$4,694 or ~$56,328/year. We’ll know the precise pension when the 2014 pay tables have been approved (hopefully later in 2013).

The good news is that the amount of the pension is the same either way, and it’s an active-duty pension in 2014 (with a COLA and cheap healthcare) instead of having to wait another decade for a Reserve pension. It’d be great if he was able to integrate with the regular Army and continue his career as an O-6, but retiring as an active-duty O-5 at $4,694/month is pretty darn good. It’s far better than a Reserve retirement, too.

Let me address a military sanctuary urban legend. It would be hypothetically possible to finish the active-duty sanctuary orders and not apply for retirement. He could finish time in grade as an O-6 in the Army Reserve for 6-18 months, and then file for his active-duty retirement. I don’t know the answer to that situation. First, I’d be terrified that the rules would change while in the Reserve unit serving out the time in grade. He might end up being forced to retire as a Reservist, and his pension wouldn’t start until he was nearly age 60. Second, he still loses a lot of money even if he gets the active-duty retirement (and O-6 retiree rank) after serving out TIG in the Reserve unit: every month that he’s in the Reserve unit he’s giving up $4,694 of active-duty pension, and even if his retiree ID says “O-6″ he can never make up the financial loss. That’s a very high price to pay.

There’s a little zinger at the end of this story: when this servicemember left active duty in 1999, he took the Special Separation Benefit. That was a drawdown incentive of “a one-time lump sum payment made on a member’s last day on active duty. The amount of the SSB lump sum payment was calculated by multiplying basic pay from your last year of service by 15%. That number was then multiplied by your years of active duty.”

Because the servicemember stayed in the military long enough to qualify for a pension, they have to pay back the SSB at a rate of 40% of their pension until the full SSB amount is recouped. What’s that financial impact?

Assuming they were an O-4 over 12 years of service, the 1999 pay tables show a base pay of $4,071.90. 15% of that year’s pay for 12 years would have been $87,953. Taxes may have been withheld at the 20% rate in 1999 so the after-tax amount would have been about $70,362, but recoupment takes the full amount even though the servicemember already paid tax on it.

(By the way, this situation is why servicemembers should keep a paper copy of their leave & earnings statements in storage for years– so that you can go back and verify these numbers when DFAS sends you a recoupment letter. Yes, I have LESs dating back to my 1970s midshipman paydays.)

The monthly repayment amount is 40% of the ~$4694 monthly pension or $1,877.60. That’s about 47 months of deductions, which means the SSB payback would be finished by June 2018.

One more disclaimer on these retirement calculations: if you have a disability rating, or any combat-related injuries resulting in combat-related special compensation, then your pension may be calculated by another medical disability retirement system referred to as “Chapter 61″. That’s much more complicated and I don’t know the rules very well, but the pension amount would be set at whichever calculation– active-duty retirement or Chapter 61– is higher.

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It’s a confusing program! The bureaucracy is difficult to navigate too.

In retrospect, I probably spent a lot longer on active duty than I needed to, and part of that was because I was blissfully ignorant of the alternatives. These days I’m happy to show others how to figure out the Reserves and retirement.